Peanut proposal offered to Senate ag committee

The Southern Peanut Farmers Federation — in recent testimony before the U.S. Senate Committee on Agriculture, Nutrition and Forestry — filed the first proposal on peanuts to be considered in a new farm bill.

The federation, composed of the Alabama Peanut Producers Association, the Georgia Peanut Commission, the Florida Peanut Producers Association and the Mississippi Peanut Growers Association, was represented by Armond Morris, an Irwin County, Ga., farmer who is chairman of the Georgia Peanut Commission.

Widespread support

In 2002, all segments of the peanut industry supported the peanut title, says Morris, who farms more than 2,000 acres of peanuts, cotton, wheat, rye and watermelons. “Our program changed significantly in the 2002 farm bill, with peanut growers going from a supply management program to a more market-oriented program,” he told the committee.

The new marketing loan, established in the 2002 bill, was $355 per ton but the effective amount for growers was approximately $405 per ton due to storage and handling fee provisions paid by the U.S. Department of Agriculture through the 2006 crop year, he said.

“Southeastern growers supported this change and led in its development,” says Morris. “Manufacturers and peanut shellers benefited from the new program's much lower prices. Consumers also saw a significant reduction in the price of peanut butter according to the U.S. Department of Commerce.

“Our industry saw incremental growth in the first few years of this farm bill, but with the increase in energy costs came dramatic changes to the U.S. peanut industry. We saw a 20 percent national reduction in acres in 2006 and we anticipate another 14 percent drop in the 2007 crop year in my home state”

Costs have increased

The University of Georgia's National Center for Peanut Competitiveness, says Morris, has determined that peanut growers' variable costs have increased by $91.15 per acre for dryland peanuts and by $118.52 for irrigated peanuts since the writing of the 2002 farm bill.

“I also did my own analysis on my farm and determined that costs had risen significantly for me,” he says. “For example, fertilizer increased from $180 per ton in 2002 to $406 per ton in 2007. Diesel fuel rose from 94 cents per gallon to $2.34 per gallon. Nitrogen more than doubled in cost during the same time period, likewise for ammonium nitrate.”

To find out what peanut producers need in a new farm bill to insure a viable industry, peanut states held meetings during which a series of questions were asked, says Morris.

“We asked producers to complete surveys. What was evident in the surveys was that our price for peanuts was too low for growers to continue to plant. What we have seen in 2006 and 2007 is a trend that will continue without changes in the program. We know the marketing loan program can work for America's peanut producers, but the price has to be a true safety net. Growers will not plant peanuts for $355 per ton,” he says.

Benefit growers

In outlining the needs of growers, Morris said that peanut producers — not non-producers — should realize the benefits of the program. “We came to you in 2002 seeking to end the peanut quota program. This next farm bill should assure that the program works for farmers and not landlords,” he said.

The Southern Peanut Farmers Federation would like the committee to consider the following for provisions for peanut title of the new farm bill:

Increase the marketing loan rate to $450 per ton.

Increase the target price to $550 per ton.

Increase the direct payment to $40 per ton.

Establish a loan deadline of June 30 with all peanuts forfeited at that point directed to non-edible/non-seed use or crushed under physical supervision.

Successful program

The current Federal-State Inspection program for peanuts has been very successful in protecting consumers and the industry. Since peanuts are generally a food ingredient, we support expanding the USDA Federal-State Inspection to include peanut manufacturing facilities similar to the meat industry. The recent peanut butter product issue impacts the entire peanut industry as well as consumers. Federal-State Inspection assures that our products go to manufacturing facilities with their seal of approval. Peanut product manufacturing should meet the same criteria to protect the consumer, who is the peanut industry's customer.

Maintaining the separate payment limit for peanuts as established in the 2002 farm bill. As discussed during the 2002 debate, the transition to a more market oriented program would not have occurred without the separate limit.

The committee is aware of the difficulty the peanut industry has had with the USDA setting the loan repayment rate. We encourage the committee to adopt language using the International Trade Commission's formula for establishing the posted price of peanuts versus the current USDA methodology.

Consider a conservation payment to encourage improved rotation and tillage practices in the peanut industry.

Disaster provisions

For disaster program provisions, include language that increases a 75-percent crop insurance coverage option to 95 percent for counties designated as disaster counties and contiguous counties.

“We recognize the significant budget constraints this Congress must face. We struggled a great deal trying to determine what peanut producers should present to the Congress for this next farm bill. What was evident from the beginning was a rapidly shrinking industry. We could not come here today and ask for a program that would ensure the demise of the U.S. peanut industry. The prices we have today do not work for a viable industry. Without changes, the U.S. peanut industry will continue to decline,” says Morris.